Jim Prentice: Canada, U.S. Must Move Beyond Keystone 'Distraction'

CALGARY - Former Conservative cabinet minister Jim Prentice is urging Canada and the United States to look beyond the contentious and high-profile Keystone XL oil pipeline when it comes to their trade relationship, calling the debate over the US$5.4-billion project a "distraction."

"We have become largely preoccupied by a dispute over a single pipeline," he said in a speech to the Canadian Defence and Foreign Affairs Institute in Calgary.

Prentice — who handled the environment and industry files during his time in government — reiterated his staunch support for the 830,000-barrel-per-day line, which would enable oilsands crude to flow to Texas refineries, saying it's in the "national interest" for both countries.

"But we must move beyond this distraction," he said Thursday. "In my view, we need a renewed focus on the bigger picture and the longer term."

Prentice, who is now an executive with CIBC (TSX:CM), zeroed in on three broader areas in which the United States and Canada should be working together.

First, he calls for greater harmonization on transportation or renewable fuel policies, rather than leaving it to a patchwork of sub-national standards. He says the two countries have made good progress on fuel consumption standards for passenger cars and trucks, but those can be expanded to heavy truck, rail and aviation. He'd also like to see more collaboration on making the continental energy grid more green with Canadian hydroelectric power.

Secondly, Canada and the United States should pursue environmental policies that are in their mutual interest.

"In a world focused on environmental issues generally, and climate change specifically, energy leadership and environmental leadership have become two sides of the same coin. Today, if you are in the energy business, you are in the environment business," he said.

Lastly, Prentice said the ability to export both oil and natural gas to global markets is a major issue not only Canada, but for the United States as well, with the continent on track to be energy self-sufficient by 2020.

In an interview Friday, Prentice expressed optimism as far as Keystone XL is concerned.

"I've been an outspoken supporter of the Keystone project and I continue to hope and believe that the president will approve it, because I think it's in the national interest of both Canada and the United States," he said.

The Obama administration's delays in making a decision on the pipeline — the regulatory process is now in its sixth year — has put a strain on Canada-U.S. relations.

"I think for sure the entire process on Keystone has been harmful, certainly not helpful, to the overall Canada-U.S. energy relationship," he said.

"I think the free market that we have created in North America is so strong and the need for continued integration is so compelling that I personally believe that at the end of the day... the United States will see its way clear to approve the project. But in the meantime, it is not helpful to the overall relationship."

Both countries have enjoyed the "biggest, most successful energy trading relationship in the world," but "there are signs that perhaps we're beginning to take aspects of that relationship for granted," added Prentice.

"Let's stand back from Keystone and look at what it is that we'll need to do to renew the North American energy relationship over the next 10 years."